The Covid-19 pandemic has taken a toll on not only our health, but also finances, and a personal loan may seem like a possible solution to our immediate financial concerns during this trying Covid-19 outbreak.
In a recent MoneySmart survey on personal loans, they found that job security and cash flow remained as the key financial stressors during Covid-19 period. Many were looking at meeting immediate household expenses and saving for emergencies during this time.
People are looking for more cash liquidity to deal with uncertainty, and 65% of respondents are looking at taking out personal loans between $20,000 to $29,000. One key factor remained consistent: Low interest rates still matter.
I, too, find myself browsing bank websites such as DBS, POSB and Citibank just to look at the best personal loan interest rates — just in case my resources run dry.
We are facing a global pandemic, and it’s not easy.
To date, Covid-19 has infected over 6 million people worldwide and resulted in about 400,000 deaths. The numbers keep growing daily.
I’ve personally seen those around me get retrenched, their companies go bust; my husband and his colleagues have been put on no-pay leave, and my job-seeking friends are on the brink of despair as their bank balance dries up.
It’s hard for some of us to even make ends meet, especially if we have a family to support and financial commitments to upkeep.
There have also been news reports that we could be headed for our worst recession in recent memory this year.
Personal loan queries are on the rise since Covid-19
Thank goodness for the cash payouts from the government. But sometimes, it’s not quite enough. Some of us might be turning to various channels (such as to banks for personal loans) for cash advances to further ease cash-flow issues or financial strain.
According to recent Google search data, Singapore has seen a 2-fold increase in finance queries in mid-March. And 7% of queries were on credit and lending, especially that on home loans and personal loans.
Perhaps they need to quickly pay off their credit card debt as the interest rates can be astronomical, or there might be unexpected expenses to take care of such as medical bills or a broken air-conditioner at home. Maybe the money goes towards buying a laptop for each child in the family, for their home-based learning needs.
However, taking on additional debt, especially during a shaky time like this, can be a risky affair.
But we do what we need to do, and the least we could do is to be responsible and do our due diligence so that we can make the best decision available.
So don’t go running to a bank to hurriedly fill out a personal loan application before being 100% sure that’s what you REALLY need.
5 things you should never use a personal loan for
Technically, a personal loan can be used for almost anything. But just because the interest rate is in your favour, that doesn’t mean you should recklessly take out a personal loan to fund your hedonistic desires.
Here are 5 things you should never use a personal loan for, and the reasons why: